U.S. Appeals Court Rules FLSA Does Not Allow Claims Solely for Withheld Tips

ATLANTA — A U.S. Appeals Court recently handed down a significant ruling in a wage theft lawsuit brought under the federal Fair Labor Standards Act (FLSA) that should set an important precedent for future actions brought by wage theft victims attempting to recover back pay. The 11th Circuit Court of Appeals upheld a lower Georgia District Court ruling that dismissed the plaintiff’s lawsuit over her inability to cite language in the FLSA that would allow her to bring suit solely for the defendant withholding tip wages.

The complaint, originally filed in U.S. District Court for the Northern District of Georgia in July 2015, alleged that the defendant promised the plaintiff and other workers an hourly wage plus tips to serve as valet drivers for AmeriPark. The complaint stated that despite its promise, the defendant withheld the plaintiff’s tips, though the valet driver still received at least the applicable state or federal minimum wage plus one and a half times the regular hourly wage for overtime hours.

The plaintiff cited a decision by the U.S. Ninth Circuit Court of Appeals from February 2016 that held that all tips from customers were the property of the employee and could not be withheld by the employer. While the ruling was hailed as a victory for tip-earning employees at the time, other courts considering the same issue have ruled differently.

The U.S. Court of Appeals for the 11th Circuit hearing this latest case ruled that because the defendant paid the plaintiff and other valets at least the applicable minimum wage and overtime, the FLSA provided no relief to recover withheld tips. Under the federal wage law, tip earning employees earning less than minimum hourly wages can bring claims to recover withheld tips if the employer fails to pay overtime or minimum wage. It remains unclear if the plaintiff will appeal the ruling to the U.S. Supreme Court and attempt to set the precedent that hourly wage earners can still retain all their tip wages.

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